RNS Number:8628N
Future Internet Technologies PLC
14 December 2006
Embargoed for 7.31am, 14 December 2006
Future Internet Technologies plc
Proposed acquisition of Artilium N.V.
Placing of New Ordinary Shares at 100 pence each
(equivalent to 20p per share per Existing Share)
Capital Reorganisation
Re-Admission to trading on AIM
Notice of Annual General Meeting
Future Internet Technologies plc ('FIT' or the 'Company') announces that
yesterday it posted a circular to shareholders (the 'Circular' or the '
Re-Admission Document') providing further detail on its proposed acquisition of
the share capital in Artilium NV ('Artilium') that it does not already own (the
'Acquisition'). The Company has also set out its intentions regarding its
strategy, markets and planned product and service offerings which are, in
summary, as follows:
* Continue to build on the strong growth of the core Artilium business
* Continue to expand Artilium's offering internationally, which has started
encouragingly
* Focus on new channels identified to broaden the customer base where early
sales have been achieved
* Leverage opportunity for a new profitable revenue stream already
identified
Paul Gratton, Executive Chairman of FIT, commented:
"Since March, FIT have been exercising management control of Artilium and we are
very encouraged with the progress which has been made to date. In particular,
we are pleased with the strong growth of the sales pipeline and are confident of
the prospects of this business and of the Enlarged Group. In addition to growth
already achieved in Benelux, we are further encouraged by an early sales
pipeline from outside the Benelux region and the Directors are confident the
geographic expansion of sales for Artilium represent an exciting opportunity to
further accelerate revenue growth. The Company has also successfully started to
broaden its customer base from its existing voice network operators to now
include cable companies and the rapidly growing channel which includes hosters,
ISPs and managed service providers. We see the Company as being excellently
positioned to take advantage of the growing demand for voice integration into
multiple business applications to be made as easy as possible for potential
resellers. This includes the opportunity to pre-integrate bundles of voice
minutes and develop yet another new profitable revenue stream for the company.
The combination of Artilium's engineering expertise and our international sales
and product marketing skills makes for a compelling global proposition. The
opportunities are certainly there and we believe that we have the right
combination of products, services and skills to exploit them."
Introduction
It is expected that trading in the Company's ordinary shares will re-commence
today following the publication of the Re-Admission Document yesterday.
The proposed Acquisition is a reverse takeover of the Company under the AIM
Rules and therefore requires the approval of Shareholders at the Annual General
Meeting ('AGM'), to be held on 5 January 2007.
Following completion of the Acquisition, the Company intends to apply for the
share capital of the Enlarged Group to be admitted to AIM. It is anticipated
that Re-Admission will take place under a new listing and trading in the New
Ordinary Shares will commence on the first dealing day following that on which
the Resolutions proposed pursuant to the Acquisition are passed at the AGM.
At the same time, the Company also proposes to consolidate every five of its
Ordinary Shares of 1 pence each into one New Ordinary Share of 5 pence each.
In addition, the Company announces its proposal to raise approximately #3
million (before expenses) through a Placing of 3,000,000 New Ordinary Shares of
#1.00 each (equivalent to 20p per Existing Share) (the 'Placing'). Of the net
proceeds, approximately #1.4 million will be used to fund the cash element of
the consideration due under the Acquisition, while the balance will provide
working capital to support the growth and development of the Enlarged Group.
The Company has also raised approximately #4.3 million via the exercise by
certain holders of their Series 1 Warrants.
Also included in the Circular are the financial results for the Company for the
year to 30 June 2006. During the year ended 30 June 2006, FIT achieved a loss
before tax of #3.8 million which included non-recurring items of #2.8m (2005
loss: #0.01 million) on revenues of #0.6 million (2005: #nil). As at 30 June
2006, FIT had net assets of #4.3 million (2005: #0.6 million).
It is the intention of the Board that, following a period of transition, Tom
Casaer, who is currently a non-executive director of the Company, will become
CEO of the Enlarged Group. Tom will work alongside Paul Gratton, Executive
Chairman and acting Chief Executive, who following the period of transition
which is expected to be completed by the end of the first quarter of 2007, will
revert to his original position of Executive Chairman
The Acquisition
* On 7 March 2006 FIT announced that it had entered into an agreement to
acquire 49 per cent. of the outstanding share capital of Artilium NV
('Artilium') for a cash payment of Euro7.5 million with the option to acquire
the balance of the issued share capital of Artilium within 12 months. On 21
June 2006, the Company formally exercised its option to acquire the
remaining 49% of the issued share capital of Artilium (the Acquisition).
The consideration under the Acquisition will, following a variation of the
terms announced on 24 November 2006, be satisfied by a payment of Euro2.1
million in cash and the issue of 2,000,000 Consideration Shares (equal to
400,000 New Ordinary Shares). This values the whole of Artilium at
approximately #6.9 million (based on the cash paid and the shares issued at
the Placing Price of #1.00 per New Ordinary Share).
Information on Artilium
* Artilium provides technology solutions to network operators and enablers.
Its core product is a Shared Service Delivery Platform ("SSDP") which
comprises a single technology platform offering a variety of services to
both the network operator and its subscribers.
* Established in Belgium in 1999 by experienced telecoms engineers, Artilium
has an established market position which it has developed by supplying its
products and services to a number of operators throughout the Benelux region
and, in conjunction with its partnership network, has already established
installations in more than ten countries across Europe.
Background and reason for the Acquisition
* Artilium has been successful in selling its platform throughout the
Benelux region but as a "software engineering" focused organisation, the
management of Artilium focussed on regional deals initially and provided a
large amount of bespoke customised software in addition to its platform.
* The Directors believe that Artilium has significant experience in the
telecoms sector and in acquiring Artilium, FIT will be able to combine its
experienced international sales and product marketing team with Artilium's
engineering capabilities.
* In the Directors' opinion the result is an opportunity to exploit
Artilium's past regional success on a global scale, capitalising on demand
for service delivery platforms. With a customer base of leading telecoms
operators and a proven track record, FIT is confident it can extend
Artilium's position as a leader in service delivery platforms from Benelux
throughout the world.
Intentions regarding the Company
* In addition to extending Artilium's core business internationally, the
Board believes there is a significant opportunity for Artilium to capitalise
on another widespread technology trend, the delivery of software as a
service ("SaaS").
* The Directors believe that, increasingly, businesses are coming to
recognise that outsourcing the management of their technology is a cost
effective decision. With the proliferation of broadband penetration into
businesses, leading software providers including Microsoft and SAP have
embraced the concept of delivering software over the internet. Warehousing
and distribution costs are virtually eliminated, updates are more easily
deployed and support can be provided more rapidly.
* To obtain business users, software providers seek to include their
applications within the product offerings of service providers (such as
internet service providers ("ISPs"), system integrators and network
operators). The Board believes this pool of service providers represents an
ideal opportunity for the sale of the Artilium platform, which integrates
business applications with telecoms networks.
* In addition, the Enlarged Group can generate revenues via the resale of
wholesale voice minutes through these business applications. Once enabled
with Artilium technology, businesses will be able to purchase blocks of
voice minutes from the same company providing their email service and their
broadband access. This bundling of solutions simplifies technology
purchasing for businesses and gives Artilium a substantial new market to
address.
This summary should be read in conjunction with the full text of the Admission
Document. The Acquisition will be subject to approval of Shareholders at an AGM
to be convened on 5 January 2007. Notice of this meeting is set out in the
Admission Document. Certain definitions and terms used in this Announcement are
also set out in the Admission Document.
Enquiries:
Future Internet Technologies plc Via Financial Dynamics
Paul Gratton, Executive Chairman
Tony Lynch, Finance Director
Financial Dynamics Tel: 020 7831 3113
Harriet Keen/James Melville-Ross/Matt Dixon
Future Internet Technologies plc
Proposed acquisition of Artilium N.V.
Proposed Placing, Re-Admission to trading on AIM and notice of Annual General
Meeting
Introduction
On 7 March 2006 FIT announced that it had entered into an agreement to acquire
49 per cent. of the outstanding share capital of Artilium for a cash payment of
Euro7.5 million. In addition, FIT had the option to acquire the balance of the
issued share capital of Artilium within 12 months for the issue of six million
Shares. The acquisition of the balance of the share capital of Artilium was
subject to, inter alia, Shareholders' approval.
On 10 March 2006, Artilium acquired a 49 per cent. stake in Aquanta for Euro1.5
million in cash. Artilium had the option to acquire the balance of the issued
ordinary share capital of Aquanta within 12 months for the issue of four million
Shares.
On 16 March 2006, the Company announced it had decided to exercise its option to
acquire the balance of the issued share capital of Artilium. On 21 June 2006,
the option was formally exercised. The acquisition of the balance of the share
capital of Artilium constitutes a reverse takeover pursuant to the AIM Rules and
trading in the Shares was therefore suspended at the Company's request pending
posting of the circular to shareholders.
On 24 November 2006, the Company announced that the terms of the acquisition of
the remaining 51 per cent. of the issued share capital in Artilium had been
varied, principally to achieve increased certainty around the timescales
relating to the acquisition. On commercial grounds, the Board decided that
Aquanta would not be part of the Company's ongoing strategy and therefore agreed
to transfer its shareholding in Aquanta to Aquanta's prior owner.
The consideration under the Acquisition will be satisfied by the allotment of
the Consideration Shares and Euro2.1 million in cash and values the whole of
Artilium at approximately #6.9 million (based on cash paid and shares issued at
the Placing price of #1.00 per New Ordinary Share).
The Company is proposing to raise #3.0 million (before expenses) through the
Placing. Of the net proceeds of the Placing, approximately #1.4 million will
fund the cash element of the consideration due under the Acquisition, while the
balance will provide working capital to support the growth and development of
the Enlarged Group.
In addition, the Company has raised approximately #4.3 million via the exercise
by certain holders of their Series 1 Warrants. Pursuant to a vote of the holders
of the Series 1 and Series 2 Warrants on 27 November 2006, the terms of the
Series 1 Warrants were amended such that the latest date for their exercise is
27 December 2006. The terms attaching to the Series 2 Warrants remain unchanged.
The Consideration Shares and the Placing Shares will represent 0.76 per cent.
and 5.72 per cent. of the Enlarged Share Capital respectively.
As the transaction is a reverse takeover of the Company under the AIM Rules, the
Acquisition requires the approval of the Existing Shareholders at the Annual
General Meeting and it is also conditional upon the passing of certain other
resolutions.
If Resolution 3 is duly passed at the AGM, the Company's existing quotation on
AIM will be cancelled and the Company will apply immediately for the Enlarged
Share Capital to be admitted to trading on AIM.
The Directors consider that the Proposals set out in the Circular are in the
best interests of the Company and recommend that Shareholders vote in favour of
the AGM Resolutions.
Background to and reasons for the Acquisition
The Company has been considering a number of investments in order to meet the
criteria of the London Stock Exchange for investing companies to make an
acquisition or acquisitions which constitute a reverse takeover. The Company
entered into discussions with the Vendor with a view to acquiring Artilium in a
reverse takeover transaction.
The Directors believe that the acquisition of Artilium should substantially
enhance shareholder value and will be in the interests of both companies and
their shareholders.
In recent years, advances in technology have enabled voice communications to be
delivered across networks as data. Together with the evolution of networks and
devices, this new technology has created a situation in telecoms known as "
convergence". The result is that voice communications can now be incorporated
into software applications and be delivered to end-users over any network,
whether fixed-line, mobile or the internet.
In the converged world of communications, any company with access to the proper
infrastructure can become a provider of innovative voice services. This
scenario has created a significant opportunity for those companies with
expertise in telephony infrastructure to expand the customer base for their
products and services.
The Directors believe that Artilium has established itself as one of the leading
telecoms software providers in the Benelux region. Founded in 1999 by
experienced telecoms engineers, Artilium has developed a service delivery
platform that enables its telecoms customers to manage voice as data and deliver
integrated services over any network. Services such as intelligent routing of
calls, number portability, pre and post-paid billing and advanced messaging are
examples of the functionality provided by Artilium's platform.
Artilium has been successful in selling its platform throughout the Benelux
region but as an engineering focused organisation, the management of Artilium
focussed on regional deals initially and provided a large amount of bespoke
customised software in addition to its platform. The Directors believe that
Artilium has significant experience in the telecoms sector and in acquiring
Artilium, FIT will be able to combine its international sales and product
marketing team with Artilium's engineering capabilities. In the Directors'
opinion the result is an opportunity to exploit Artilium's past regional success
on a global scale, capitalising on demand for service delivery platforms. With
a customer base of leading telecoms operators and a proven track record, FIT is
confident it can extend Artilium's position as a leader in service delivery
platforms from Benelux throughout the world.
Market for Artilium's products
The market for Artilium's telecoms Shared Service Delivery Platform ("SSDP") has
broadened in the past decade and with recent advancements in technology, the
Directors believe the market is now poised to expand substantially.
Historically, providers of communication services were large state-owned
telecoms operators. With the privatisation of most state-owned operators and
market deregulation intended to foster increased competition, the type and
number of communication providers has significantly increased. For example, in
the United States this has given rise to independent local exchange carriers
("ILECs"), competitive local exchange carriers ("CLECs"), cable operators, and
new voice over internet protocol ("VoIP") operators. Typically, these new
telecoms providers require a service delivery platform infrastructure.
Artilium predominantly markets its products to mobile network operators
("MNOs"), mobile virtual network operators ("MVNOs"), mobile virtual network
enablers ("MVNEs") and fixed network operators.
MNOs
An MNO is a telecoms company that provides mobile services to subscribers. In
order to provide such services, the MNO owns the necessary infrastructure and
wireless spectrum licence. An example of an MNO is Vodafone.
In addition to the changes seen in the traditional telecoms market, advancements
in MNO business models have also expanded the market for Artilium's products.
Traditionally, governments viewed the wireless spectrum as a scarce resource and
auctioned the rights to use portions of this spectrum for telecoms purposes to
the highest bidder. The successful acquirers of the spectrum auctions, typically
being the large MNOs, have identified an opportunity to increase the value of
their rights to this spectrum. Rather than attempting to market a single brand
to all consumers, the MNOs have created a new market segment for MVNOs.
MVNOs
An MVNO is a mobile operator that does not own its own spectrum, and that
typically does not have its own network infrastructure. Some MVNOs rely
completely on the offered infrastructure of the host mobile network operator,
whereas others want to own and/or control some of their own infrastructure. The
MVNO is generally granted the right to use the MNO's wireless spectrum and
certain technology in order to create their own targeted brand.
MVNOs typically add value such as brand appeal and distribution channels to the
resale of mobile services. MVNOs position their operations so that customers do
not distinguish any significant differences in service or network performance,
yet offer some affinity to their customers.
A benefit for the traditional MNO co-operating with MVNOs is that, despite the
maturity of the mobile market, it is able to broaden its customer base at a low
cost of acquisition and with a limited investment on its own part while keeping
control of its entire network. An example of an MVNO is Virgin Mobile.
The Directors believe that, for Artilium, the advent of the MVNO market creates
platform sales opportunities to both the MNO and MVNO that wants more control
over the services they provide to their subscribers.
MVNEs
An MVNE does not typically have a relationship with subscribers. Rather, an MVNE
provides infrastructure and services enabling MVNOs to offer services to their
subscribers. As MVNEs may not have a relationship with end-users, they tend to
have a lower public profile than MNOs and MVNOs.
Fixed network operators
A fixed network operator offers fixed as opposed to mobile telephony services.
An example of a fixed network operator is BT.
Information on Artilium
Established in Belgium in 1999, Artilium is focused on the emerging market of
providing Shared Service Delivery Platforms ("SSDP") services for the telecoms
industry and internet service providers. It supplies hardware and software as
well as consultancy services. It has considerable experience in this area and in
conjunction with its partnership network has already established installations
in more than ten countries across Europe.
Artilium creates solutions that are built on and around operating systems. This
enables operators and service providers to optimise and control their existing
operating systems. Artilium's products can be used for fixed, mobile, ATM and IP
networks, as well as for diverse and converged operating systems.
Information on FIT
The Company was originally admitted to trading on AIM in February 2000. By the
end of its financial year to 30 June 2002 it had acquired and disposed of a
trading business and had become an investment company with a residual holding in
a private Hong Kong based internet company.
The Company raised funds from shareholders and was until recently a cash shell
with no business. Pursuant to recent changes to the AIM Rules, an AIM listed
investment company must have, by 5 July 2006, made an acquisition or
acquisitions constituting a reverse takeover, failing which its shares would be
suspended from trading and de-listed six months thereafter if a reverse takeover
had not taken place.
The Acquisition constitutes a reverse takeover for the purposes of the AIM
Rules. Accordingly, as the Company announced on 16 March 2006, trading in FIT's
shares was suspended at the Company's request pending the posting of a circular
to shareholders providing further detail on the transaction with Artilium.
Following consultation with AIM, the Company received an extension to the six
months timeframe which would otherwise have resulted in the Company's listing
being terminated on 16 September 2006 due to the then current suspension having
continued for more than a six month period. AIM granted an extension to the
Company's listing to 15 December 2006. Accordingly a resolution is proposed at
the AGM to approve the Proposals as part of the Company's on-going investment
strategy.
Intentions regarding the Company
In addition to extending Artilium's core business internationally, the Board
also believes there is a significant opportunity for Artilium to capitalise on
another widespread technology trend, the delivery of software as a service
("SaaS").
The Directors believe that, increasingly, businesses are coming to recognise
that outsourcing the management of their technology is a cost effective
decision. With the proliferation of broadband penetration into businesses,
leading software providers including Microsoft and SAP have embraced the concept
of delivering software over the internet. Warehousing and distribution costs are
virtually eliminated, updates are more easily deployed and support can be
provided more rapidly.
To obtain business users, software providers seek to include their applications
within the product offerings of service providers (such as internet service
providers ("ISPs"), system integrators and network operators). The Board
believes this pool of service providers represents an ideal opportunity for the
sale of the Artilium platform, which integrates business applications with
telecoms networks. In addition, the Enlarged Group can generate revenues via the
resale of wholesale voice minutes through these business applications.
The Board believes that many of the most popular business applications are
ideally suited for integration with voice technology. FIT has identified email,
personal information management ("PIM"), workspace collaboration and customer
resource management ("CRM") as the priority applications for voice integration.
By integrating voice functionality, business users obtain access to a wide array
of productivity enhancing tools, as well as cost savings for their phone
services via the use of VoIP technology. One such example would be the ability
to schedule and conduct a conference call with one-click from within an email
application, thereby eliminating the difficulties often associated with
coordinating conference calls.
Once enabled with Artilium technology, businesses will be able to purchase
blocks of voice minutes from the same company providing their email service and
their broadband access. This bundling of solutions simplifies technology
purchasing for businesses and gives Artilium a substantial new market to
address.
Although the Directors are of the opinion that the Company, following the
Proposals, has sufficient working capital at Re-Admission for its present
requirements, that is for at least the 12 months following Re-Admission, the
Company may need to raise further funds during or after this period in order to
take advantage of additional opportunities that may be presented to it.
Financial information
During the year ended 30 June 2006, FIT achieved a loss before tax of #3.8
million (2005 loss: #0.01 million) on revenues of #0.6 million (2005: #nil). As
at 30 June 2006, FIT had net assets of #4.3 million (2005: #0.6 million).
The Acquisition
Under the terms of the Acquisition, FIT is to acquire all the issued Artilium
Shares it does not already own in exchange for the allotment and issue of the
Consideration Shares and Euro2.1 million in cash.
The Acquisition is conditional, inter alia, on:
(i) the passing of the Resolution at the AGM to approve the Acquisition
and Re-Admission
(ii) the Placing having become unconditional in all respects save as
regards completion of the Acquisition and Re-Admission; and
(iii) Re-Admission becoming effective.
The Acquisition will not complete if these conditions have not been satisfied by
31 January 2007 or such later date as FIT and the Vendor may decide.
The Artilium shares will be acquired free from all liens, charges, equitable
interests, encumbrances and third party rights now or hereafter attaching
thereto, including the right to all dividends and other distributions, if any,
hereafter declared, made or paid.
The Placing
The Company proposes to raise approximately #3 million before expenses through
the Placing which is conditional only upon Admission.
Use of funds
An amount of approximately #1.4 million will be used to fund the cash element of
the consideration due under the Acquisition, while the balance will provide
working capital to support the growth and development of the Enlarged Group.
Details of the Consideration Shares, Placing Shares and New Ordinary Shares
The Consideration Shares will be issued credited as fully paid and will, in
aggregate, represent approximately 0.76 per cent. of the Enlarged Share Capital.
The Placing Shares will be issued credited as fully paid and will, in aggregate,
represent approximately 5.72 per cent. of the Enlarged Share Capital.
The resolutions proposed at the AGM include a resolution to consolidate every
five Existing Shares of 1 pence each into one New Ordinary Share of 5 pence
each. Any fractions resulting from the consolidation will be aggregated and sold
in the market for the benefit of the Company
The Consideration Shares and Placing Shares will rank pari passu with the New
Ordinary Shares in all respects, including the right to receive all dividends or
other distributions declared, made or paid after the date of this Circular.
Directors
The Directors and their functions are as follows:
Paul Robert Gratton, Executive Chairman and Acting Chief Executive Officer, age
47
Mr Gratton joined the Company in June 2006 from Egg plc where he held the
position of CEO from 2001. Mr Gratton has enjoyed an extensive career in retail
banking and was one of the founding members of First Direct, the leading UK
telephone bank and of Egg, the world's largest online direct bank boasting over
3.5 million customers.
Kieran Anthony Lynch, Chief Financial Officer, age 36
Mr Lynch joined the Company in June 2006 from Aspect Capital, a specialist hedge
fund manager where he held the position of Director of Finance. Mr Lynch's
previous positions include Chief Operating Officer and Company Secretary at
Select Asset Management in Sydney and Group Financial Controller at Egg plc.
Previously, Mr Lynch was an audit manager within the Financial Markets Division
at Arthur Andersen.
Tom Casaer, Non-Executive Director and CEO-elect, age 39
Mr Casaer was appointed to the Board in September 2006. Mr Casaer has 15 years'
experience in business development and sales and marketing in the IT and
communications sector, most notably as channel manager for "Software as a
Service", where he managed hoster relationships in the communications sector
group at Microsoft EMEA. Before joining Microsoft in 2000, he held various
management positions at Hilti NV until 1996; and was involved in the European
launch of Firstmark Communications Inc. in 1998 and the start up of an
applications service provider, Intellimus.com, in 1999.
It is the intention of the Board that, following a period of transition, Tom
Casaer, who is currently a non-executive director of the Company, will become
CEO of the Enlarged Group. Tom will work alongside Paul Gratton, Executive
Chairman and acting Chief Executive, who following the period of transition
which is expected to be completed by the end of the first quarter of 2007, will
revert to his original position of Executive Chairman.
Paul Nicholas Thornton, Senior Non-Executive Director, age 59
Mr Thornton is a management consultant with over 30 years experience. Mr
Thornton held a number of senior positions at PA Consulting during his time
there from 1975 to 1994. In 1994 he founded his own consultancy French Thornton
which in 2000 he exited from when the firm was sold to ITNET plc. He was
formerly president of the Management Consultancies Association. Mr Thornton
graduated from Liverpool University in 1967 with a B.Sc (Hons) in mathematics
and in 1969 gained a Certificate of Advanced Study, in Operational Research from
Brunel University.
Richard James Armstrong, Non-Executive Director, age 59
Mr Armstrong is currently an associate of Fiske plc, an AIM-listed stockbroking
firm, where he specialises in floating smaller companies, raising funds for such
companies and initiating corporate transactions. He is currently a director of
Fortfield Investments plc which is quoted on AIM and also of Crescent Technology
Ventures Plc and BWA Group pc.
Corporate governance
The Company intends to adopt the Corporate Governance Guidelines for AIM
Companies issued by the Quoted Companies Alliance in July 2005. The Directors
consider these guidelines to be appropriate for a company of FIT's size. With
the expected growth of the Enlarged Group, the Directors will undertake a review
of the Combined Code and the Code of Best Practice published by the London Stock
Exchange and implement those areas deemed to be appropriate for the size and
stage of development of the Company.
Share and other performance based incentive schemes
The Directors consider that it is in the best interests of the Enlarged Group to
establish certain share incentive schemes to incentivise and reward the
performance of employees and executive directors. The Directors accordingly
propose the adoption of an unapproved share option scheme (the "Unapproved Share
Option Scheme") and a long term incentive plan (the "LTIP"). The details of the
Unapproved Share Option Scheme and the LTIP are set out in the Circular.
Resolutions concerning the Unapproved Share Option Scheme and the LTIP, which
are proposed as ordinary resolutions at the AGM, will, if passed, approve the
adoption by the Company of the Unapproved Plan and the LTIP. The Company has
agreed the purchase of 7,500,000 Series 2 Warrants at a price of 2p each from
each of IC Partners Limited and Cold Investments Limited and has exercised those
Warrants, the resultant 15,000,000 Existing Shares (equivalent to 3 million New
Ordinary Shares) being held for the benefit of the Company's employee benefit
trust.
Dealings and trading
Application will be made by the Company for the Enlarged Share Capital to be
admitted to AIM following publication of the Circular. It is expected that
Re-Admission will take place and trading in the New Ordinary Shares will
commence on the first dealing day following that on which the Resolutions
relating to the Proposals are passed at the Annual General Meeting. All the New
Ordinary Shares may be held in either certificated or uncertificated form (i.e.
in CREST).
Dividends
The Directors anticipate that any earnings will, for the forseeable future, be
retained by the Company for the development of the business of the Enlarged
Group and will not be distributed to Shareholders as cash or other dividends.
The declaration and payment by the Company of dividends will, once the Enlarged
Group has achieved its development objectives, be dependent upon the Company's
results from operations and other factors deemed to be relevant at that time.
Warrant conversions
Since the Company's suspension on 16 March 2006, the following Warrants have
been exercised:
Exercise Date Warrant Subscription Existing Shares
Series Price Issued
13 March 2006 Series 1 12 pence per share 850,000
8 July 2006 Series 1 12 pence per share 5,000,000
8 July 2006 Series 1 12 pence per share 3,250,000
10 August 2006 Series 1 12 pence per share 200,000
16 August 2006 Series 1 12 pence per share 4,000,000
16 August 2006 Series 1 12 pence per share 750,000
6 December 2006 Series 1 12 pence per share 3,850,000
8 December 2006 Series 1 12 pence per share 250,000
8 December 2006 Series 1 12 pence per share 5,000,000
8 December 2006 Series 1 12 pence per share 1,000,000
12 December 2006 Series 1 12 pence per share 100,000
12 December 2006 Series 2 15 pence per share 15,000,000
12 December 2006 Series 1 12 pence per share 1,000,000
14 December 2006 Series 1 12 pence per share 28,949,000
Application has been made for the Existing Shares issued pursuant to the
conversion of the Warrants to be admitted to trading on AIM.
Annual General Meeting
An AGM of the Company is to be held at the offices of Morrison & Foerster,
CityPoint, One Ropemaker Street, London, EC2Y 9AW at 10 a.m. on 5 January 2007.
Further information
A copy of the Circular will be available for one month, free of charge, from the
registered office of the Company, MoFo Notices Limited, CityPoint, One Ropemaker
Street, London EC2Y 9AW
Future Internet Technologies plc
Preliminary results for the year to 30 June 2006
Future Internet Technologies plc and its subsidiary (the "Group") announces its
preliminary results for the year ended 30 June 2006
Business review
The operating loss for the Group for the year to 30 June 2006 incorporating 4
months of trading from Artilium amounted to #2.9 million (2005: #16,000). At 30
June 2006 the Group had consolidated net assets of #4.3 million (2005: #0.6
million). Total headcount of the Group at year end was 37.
On 16 March 2006, trading in FIT's shares was suspended at the Company's request
pending the posting of a circular to shareholders providing further detail on
certain proposed transactions with Advance Global Communications, Inc ("AGC")
and Artilium. The Company has been in continual consultation with the AIM team
of the London Stock Exchange concerning a possible extension to the application
of Rule 41 of the AIM Rules which would otherwise result in the Company's
listing being terminated on 16 September 2006 due to the current suspension
having continued for more than a six month period. It has been agreed with the
AIM team that the Company's shares will remain suspended pending the publication
of such a circular, which is now envisaged to be on or around 15 December 2006.
On 13 October, after extensive discussions with the shareholders of AGC, it was
agreed between the parties that the Company would not proceed to acquire any of
the share capital of AGC. However, the Company will complete the reverse
takeover of Artilium on or around 8 January 2007 upon the approval of
shareholders.
The Directors believe that Artilium has established itself as one of the leading
telecom infrastructure providers in Benelux. Founded in 2000 by experienced
telecommunication engineers, Artilium has developed a service delivery platform
that enables its telecom customers to manage voice as data and deliver
integrated services over any network. Services such as intelligent routing of
calls, number portability, pre and post-paid billing and advanced messaging are
examples of the functionality provided by Artilium's platform.
Future Internet Technologies plc
Consolidated income statement
Year ended 30 June 2006
Consolidated Consolidated
Note 2006 2005
#'000 #'000
Revenue 612 -
Cost of sales (56) -
Gross profit 556 -
Other operating income - 15
Administrative expenses (3,409) (31)
Other operating expenses (6) -
Operating loss (2,859) (16)
Investment revenues 135 25
Other losses (698) (15)
Finance costs (349) -
Loss before tax (3,771) (6)
Tax (152) -
Loss for the year 2 (3,923) (6)
Attributable to:
Equity holders of parent (3,159) (6)
Minority Interest (764) -
(3,923) (6)
Consolidated Consolidated
Note 2006 2005
pence pence
Loss per share
Basic 3 (2.86) (0.03)
Diluted 3 (2.86) (0.03)
Future Internet Technologies plc
Consolidated statement of recognised income and expense
Year ended 30 June 2006
Consolidated Consolidated
2006 2005
#'000 #'000
Exchange differences on translation of foreign operations 2 -
Net income recognised directly in equity 2 -
Loss for the year (3,923) (6)
Total recognised income and expense for the year (3,921) (6)
Attributable to:
Equity holders of parent (3,158) (6)
Minority interest (763) -
(3,921) (6)
Future Internet Technologies plc
Consolidated balance sheet
30 June 2006
Consolidated Consolidated
2006 2005
#'000 #'000
Non-current assets
Goodwill 2,697 -
Intangible assets 837 -
Plant and equipment 170 -
Deferred tax asset 119 -
Investments - 18
3,823 18
Current assets
Inventories 118 -
Trade and other receivables 1,925 5
Cash and cash equivalents 1,911 552
3,954 557
Total assets 7,777 575
Current liabilities
Trade and other payables 2,849 16
Obligations under finance leases 4 -
Provisions 425 -
3,278 16
Non-current liabilities
Deferred tax liabilities 180 -
Total liabilities 3,458 16
Future Internet Technologies plc
Consolidated balance sheet
30 June 2006
Consolidated Consolidated
Note 2006 2005
#'000 #'000
Equity
Share capital 4 1,769 4,654
Share premium account 9,033 2,596
Capital redemption reserve 4,493 -
Option to acquire minority interest (1,611) -
Share warrants reserve 336 -
Translation reserve 2 -
Retained earnings (9,849) (6,691)
Equity attributable to equity holders of the parent 4,173 559
Minority interest 146 -
Total equity 4,319 559
Total liabilities and equity 7,777 575
Future Internet Technologies plc
Consolidated cash flow statement
Year ended 30 June 2006
Consolidated Consolidated
Note 2006 2005
#'000 #'000
Net cash used in operating activities 5 (1,732) (23)
Investing activities
Interest received 135 25
Sale of investments 21 -
Purchases of property, plant and equipment (34) -
Purchases of investments (691) -
Acquisition of subsidiary (4,370) -
Net cash (used in) / from investing activities (4,939) 25
Financing activities
Repayments of obligations under finance leases (5) -
Proceeds on issue of shares 8,046 -
Net cash from financing activities 8,041 -
Net increase in cash and cash equivalents 1,370 2
Cash and cash equivalents at beginning of year 552 550
Effect of foreign exchange rate changes (11) -
Cash and cash equivalents at end of year 1,911 552
Future Internet Technologies plc
Notes to the results statement
Year ended 30 June 2006
1. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) for the first time. Under first time
adoption procedures set out in IFRS 1 First-time Adoption of International
Financial Reporting Standards, the Company is required to establish its IFRS
policies as at 1 July 2005 and to apply these retrospectively in the
determination of prior period comparatives from 1 July 2004, the date of
transition.
No adjustments affecting the Company's equity, net income and cash flows have
been identified on transition from UK GAAP to IFRS. Consequently no
reconciliation table has been provided.
The financial statements have also been prepared in accordance with IFRSs
adopted by the European Union and therefore comply with Article 4 of the EU IAS
Regulation.
The financial statements have been prepared on the historical cost basis.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and the entity controlled by the Company (its subsidiary) made up to
30 June each year. Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
The Company acquired its first subsidiary in the year ended 30 June 2006 and as
a result the comparative information for the year ended 30 June 2005 is on a
company basis. Minority interests in the net assets of consolidated subsidiaries
are identified separately from the Group's equity therein. Minority interests
consist of the amount of those interests at the date of the original business
combination (see below) and the minority's share of changes in equity since the
date of the combination. Losses applicable to the minority in excess of the
minority's interest in the subsidiary's equity are allocated against the
interests of the Group except to the extent that the minority has a binding
obligation and is able to make an additional investment to cover the losses.
The result of the subsidiary acquired during the year is included in the
consolidated income statement from the effective date of acquisition.
Where necessary, adjustments are made to the financial statements of the
subsidiary to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
2. Loss for the year
Loss for the year has been arrived at after charging / (crediting):
Consolidated Consolidated
2006 2005
#'000 #'000
Net foreign exchange gains (11) -
Operating lease rentals - land and buildings 47 -
Depreciation of plant and equipment 31 -
Amortisation of intangibles 60 -
Impairment of investment 698 15
Profit on sale of investments (14) -
Cost of inventories recognised as expense 56 -
Staff costs (see note 6) 786 -
Employee benefits 14 -
Auditors' remuneration for audit services (see below) 30 3
Amounts payable to Deloitte & Touche LLP (2005: Orolus Limited) and their
associates by the Company and its UK subsidiary undertakings in respect of
non-audit services were #7,500 (2005: #300).
Costs of #131,611 have been recognised during the year in respect of the
professional costs incurred in connection with an aborted acquisition.
3. Earnings per share
The consolidated group has no discontinued operations. The warrants on issue do
not have a dilutive effect as the market price of ordinary shares exceeded the
exercise price of the warrants during the financial year. As a result, diluted
earnings per share is the same as basic earnings per share.
Consolidated Consolidated
2006 2005
#'000 #'000
Earnings
Earnings for the purposes of basic earnings per
share being net profit attributable to equity holders
of the parent (3,159) (6)
Number Number
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per share 110,552,747 16,050,006
4. Share capital
2006 2005
#'000 #'000
Fully paid ordinary shares:
Authorised:
1,050,676,947 (2005: 1,050,676,947) ordinary
shares of 1 pence each 10,507 10,507
Issued and fully paid:
176,900,006 (2005: 16,050,006) ordinary shares
of 1 pence each 1,769 161
Deferred ordinary shares:
Authorised:
900,447 (2005: 900,447) deferred ordinary
shares of #4.99 each 4,493 4,493
Issued and fully paid:
Nil (2005: 900,447) deferred ordinary shares
of #4.99 each - 4,493
2006 2005
No. '000 #'000 No. '000 #'000
Fully paid ordinary shares:
Balance at beginning of financial year 16,050 161 16,050 161
Shares issued 160,000 1,600 - -
Warrant conversion 850 8 - -
Issued and fully paid: 176,900 1,769 16,050 161
Fully paid ordinary shares carry one vote per share and carry the rights to
dividends.
2006 2005
No. '000 #'000 No. '000 #'000
Deferred ordinary shares:
Balance at beginning of financial year 900 4,493 900 4,493
Shares repurchased (900) (4,493) - -
Issued and fully paid: - - 900 4,493
Deferred ordinary shares do not carry the right to vote and do not carry the
rights to dividends.
On 22 December 2005 the Company bought back all of its issued deferred share
capital comprising 900,447 shares with a nominal value of #4.99 each for a total
consideration of 1 pence. This effect of this transaction has been to reduce
issued share capital by #4,493,231 and create a capital redemption reserve of
the same amount.
5. Notes to the cash flow statement
Consolidated Consolidated
2006 2005
#'000 #'000
Loss from continuing operations (3,923) (6)
Adjustments for:
Investment revenues (135) (25)
Impairment of investment 698 15
Tax 152 -
Depreciation of property, plant and equipment 31 -
Amortisation of intangible assets 60 -
Share based payment expense 336 -
Gain on disposal of property, plant and equipment (14) -
Increase / (decrease) in provisions 425 -
(2,370) (16)
Operating cash flows before movements in
working capital
Increase in inventories (34) -
Decrease / (increase) in receivables (1,139) 1
Increase / (decrease) in payables 2,163 (8)
Cash generated by operations (1,380) (7)
Income taxes paid (352) -
Net cash from operating activities 1,732 (23)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
6. Events after the balance sheet date
On 11 September 2006, the Board agreed the sale, to Flasktent Limited, of
certain of the Group's intellectual property and physical assets pertaining to a
potential consumer offering and the rights related thereto.
As a result of the sale of certain assets to Flasktent Limited, the Company will
no longer pursue the creation of a consumer branded "Unified Communication
Service". Instead, the Group will focus upon opportunities in the B2B and B2B2C
communication sector based on completion of the transactions outlined below.
On the same date, Robert Bonnier resigned as Chief Executive and director of FIT
and left the Company. Paul Gratton, Executive Chairman of FIT, has assumed the
role of acting Chief Executive.
Pursuant to the transaction, Flasktent Limited acquired certain assets which had
yet to become revenue generating and had a capitalised value of approximately
#1.3 million. In consideration for the assets, Flasktent assumed approximately
#3.0 million of existing FIT obligations of which #1.2 million were currently
due at the date of the transaction. FIT may also receive up to #15 million of
deferred consideration, which is contingent upon a realisation of equity in
Flasktent for value within three years of the transaction date. Certain
personnel also transferred from FIT to Flasktent. FIT agreed to make a further
payment in respect of the development costs of Flasktent's proposition, the net
effect to the Group being approximately #0.1 million. Flasktent will assume the
future commitments relating to the assets thus removing any further obligations
from the Company.
On 16 March 2006, trading in FIT's shares was suspended at the Company's request
pending the posting of a circular to shareholders providing further detail on
certain proposed transactions with Advance Global Communications, Inc ("AGC")
and Artilium. The Company has been in continual consultation with AIM
concerning a possible extension to the application of Rule 41 of the AIM Rules
which would otherwise have resulted in the Company's listing being terminated on
16 September 2006 due to the current suspension having continued for more than a
six month period. It has been agreed with the AIM team that the Company's shares
will remain suspended pending the publication of such a circular, which is now
envisaged to be on or around 15 December 2006.
On 8 December 2006 resolutions were passed at an EGM to reorganise the share
capital of the Company. The effect of the capital reorganisation is to remove
shareholders holding less than 20 shares from the Company's share register.
7. Financial Statements
The announcement set out above does not constitute a full financial statement of
the Group's affairs for the period ended 30 June 2006. The auditors have
reported on the full accounts for the period and have accompanied them with an
unqualified report. The accounts have yet to be delivered to the Registrar of
Companies. The annual report and accounts have been posted to shareholders.
8. Further Copies
Copies of the annual report and accounts will be available from the Company's
registered office at MoFo Notices Limited, City Point, One Ropemaker Street,
London, EC2Y 9AW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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